IDEAS home Printed from https://ideas.repec.org/p/red/sed018/1160.html
   My bibliography  Save this paper

Currency Stability Using Blockchain Technology

Author

Listed:
  • Bryan Routledge

    (Carnegie Mellon University)

  • Ariel Zetlin-Jones

    (Carnegie Mellon University)

Abstract

Arbitrary speculative attacks on currencies can arise from self-fulfilling expectations. This is a well-studied source of currency crises. In this paper, we show that blockchain distributed ledger technologies, such as those which support Bitcoin and Ethereum, can be adapted to eliminate self-fulfilling speculative attacks on a currency. We show how to develop a stable currency peg, such as Pesos to Dollars, using a cryptocurrency. We show the peg is immune to speculative attacks arising from self-fulfilling prophecies and estimate the size of reserves and transaction costs needed to support the peg.

Suggested Citation

  • Bryan Routledge & Ariel Zetlin-Jones, 2018. "Currency Stability Using Blockchain Technology," 2018 Meeting Papers 1160, Society for Economic Dynamics.
    • Handle: RePEc:red:sed018:1160
    as

    Download full text from publisher

    File URL: https://red-files-public.s3.amazonaws.com/meetpapers/2018/paper_1160.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kee‐Youn Kang & Seungduck Lee, 2024. "Money, Bitcoin, and Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 56(1), pages 225-256, February.
    2. Yukun Liu & Aleh Tsyvinski, 2018. "Risks and Returns of Cryptocurrency," NBER Working Papers 24877, National Bureau of Economic Research, Inc.
    3. Bruno Sultanum, 2021. "The Cost of Information in the Blockchain: A Discussion of Routledge and Zetlin-Jones," Working Paper 21-02, Federal Reserve Bank of Richmond.
    4. Gilles Hilary & Laura Xiaolei Liu, 2021. "Blockchain and Other Distributed Ledger Technologies in Finance," Springer Books, in: Raghavendra Rau & Robert Wardrop & Luigi Zingales (ed.), The Palgrave Handbook of Technological Finance, pages 243-268, Springer.
    5. Feng Dong & Zhiwei Xu & Yu Zhang, 2022. "Bubbly Bitcoin," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 74(3), pages 973-1015, October.
    6. Yukun Liu & Aleh Tsyvinski & Xi Wu, 2019. "Common Risk Factors in Cryptocurrency," NBER Working Papers 25882, National Bureau of Economic Research, Inc.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed018:1160. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.